Why Now,
Why Living?

In the autumn of 2025, something unusual surfaced across the global real estate industry. CBRE and JLL, Blackstone and Nuveen, PGIM and Hines — eighteen major research and investment institutions, each with different mandates and methodologies, began pointing in the same direction.

Incorporate APAC Living as a core asset allocation in your portfolio.

BREIT — Blackstone's flagship real estate income trust — holds 19% in multifamily, 8% in student housing, 8% in affordable housing, and 7% in single family rental as of Q1 2026, with total rental housing exposure reaching 43% of fund AUM.4 Hines titled its 2026 outlook Cleared for Takeoff, reporting that "more than 80% of households in developed markets now lean toward renting over owning."5 JLL projected global Living investment would surpass USD 250 billion in 2026 — a historical first.1 PGIM's 2026 Best Ideas was even more direct: Global Living: Tapping into Structural Growth.6

Analyses with such different starting points rarely converge on a single destination. When they do, the accurate term is not "consensus" but convergence. And where convergence happens, something structural is almost always waiting underneath. This is exactly where APAC Living stands today.

The question this report pursues is simple. Why is so much capital flowing into APAC Living — and why now? And where should that capital go?

The answer lies in three simultaneous shifts. The shape of households has changed. The door to new supply has slammed shut. And the very ownership of capital is being reshaped. This essay traces these three shifts in turn, then examines how urban economics — refined between the late 19th and mid-20th centuries — illuminates what we're seeing today. Old theories often explain new phenomena well. The classics, after all, capture universal principles.

The first shift begins at home — literally. Across APAC's advanced economies, single-person households are now the fastest-growing household type, propelled by delayed marriage, rising divorce rates, and accelerating aging. The composition is changing in parallel: the unmarried thirtysomething, the divorced fortysomething, and the elderly living alone each now count as a household of one, and their share of the total is rising at a remarkable pace.

According to Statistics Korea, the country's single-person household share rose from 27.2% in 2015 to 35.5% in 2023 — an 8.3-percentage-point increase in eight years.7 Seoul alone moved from 29.5% to 39.3% over the same stretch.7 Japan has already crossed 38%, Australia 26%, Hong Kong 20%. Across nearly every advanced economy in APAC, with the exception of Singapore, single-person households are the fastest-growing household type.

What these numbers mean runs deeper than they appear. Even as total population declines, the number of households keeps rising. The unit that drives housing demand is not "population" but "households." Korea's total population peaked in 2020 and has begun to contract, yet household count is projected to keep expanding through 2050. Japan follows the same pattern. This dynamic is sometimes described as shrinking nation, growing city.

What deserves closer attention is the composition of these households. Korean singles aged 20 to 40 concentrate, overwhelmingly, in the largest cities. They defer or abandon the path to ownership, staying in the rental market for extended periods. According to M&G Investments, more than half of Seoul's nine million residents rent.3 And this isn't only Korea's story. In both Japan and Korea, more than half of all households have long since settled on the rental side of the ledger — not the ownership side.

To summarize: single-person households are growing, staying in the rental market longer, and gravitating toward the largest cities. The demand picture is that clear.

One figure from Hines' 2026 outlook reinforces the point made earlier. Across its surveyed developed markets, more than 80% of households now show momentum toward renting rather than buying — the same threshold cited at the outset of this report.5 Renting is no longer the default — it has become the choice.

The second shift unfolded on the supply side — or more precisely, it didn't unfold at all.

Here we must pause on Harvard urban economist Edward Glaeser. In the early 2000s, he and his collaborator Joseph Gyourko redrew the map of real estate markets with a single concept: housing supply elasticity.

Supply elasticity (ε_s) is simple in concept. It measures how much supply expands when prices rise by 1%. When this value approaches 1, supply rises to match demand, and the market finds its balance. When it drops below 0.3, the story changes. Over 70% of demand shocks pass straight through to prices and rents. Supply, quite simply, doesn't budge.

Run the numbers on APAC's gateway cities, and the results are striking. Tokyo 0.3–0.5. Seoul 0.2–0.4. Hong Kong 0.1–0.3. Singapore 0.3–0.5. Every single one is structurally inelastic. By contrast, Shanghai at 0.8–1.2 and Mumbai at 0.6–1.0 fall on the elastic end. Where does the difference come from?

The reasons differ by city, but the result points in a single direction. In Seoul, construction costs have risen by approximately 30% since 2020 (KICT Construction Cost Index), with individual project escalations running materially higher in select cases, land prices sit at historic peaks, and a tower of acquisition, holding, and capital gains taxes has crushed new-supply economics. In Tokyo, construction costs weigh on already high-density land. In Hong Kong, the government monopolizes land itself and controls supply pace. Singapore runs a system where planning authorities match supply to demand. Supply doesn't move not because of a single constraint, but because cost, tax, and policy layer over each other, pressing down together.

Supply doesn't budge. Demand keeps structurally surging. Where rents head is already written on the first page of the economics textbook.

The third shift is happening in the ownership of capital itself.

The hands that move capital in APAC's Living market look different in every city. In Tokyo, it's the developers. In Singapore, the state. In Sydney, global institutions. In Seoul, the market was long driven by jeonse — a Korean rental structure where tenants make a large lump-sum deposit (often 60–80% of property value) in lieu of monthly rent, with landlords deploying the deposit as interest-free capital. For decades, Seoul's rental market ran on this informal finance network. But since 2022, the jeonse framework has begun to crack. The market is shifting toward a monthly-rent, cash-flow-based model with unusual speed. When the face of capital changes, so does the character of the market itself.

In August 2025, a new corporate nameplate appeared in Seoul's Magok district: The Living Company Korea. Australia's largest residential real estate group had just established a Korean subsidiary.9 Two months earlier, in July, the world's largest rental housing operator — Greystar, managing USD 79 billion in assets across 1.1 million units globally — opened a Seoul office.8 Morgan Stanley, KKR, and Hines have openly been studying the Korean market for years.

They arrived at the same conclusion from different angles. What's revealing is the entry point they're targeting. It isn't the opening of the Korean market itself. It's the gap — the space left empty while domestic institutional capital has hesitated.

Korea is simply the most visible case; the same scene plays out across APAC. In Australia, Build-to-Rent (BTR) has graduated from a niche product into a mainstream institutional asset class. Japanese multifamily has firmly established itself as an "income anchor" in global core strategies. According to Colliers, fundraising targeting APAC rose more than 130% versus 2024, with 11% of all new global capital now heading to the region. The share of cross-border capital has surged to 33% — its highest level since 2019.2

Capital doesn't lie. When capital moves at scale — persistently, even establishing new regional entities — there is always a structural shift behind it. The demand-supply imbalance we've just traced. And now, a third axis joins the picture: the changing ownership of capital itself. This is the final piece that, in 2026, moves APAC Living from "emerging" to "core."

In 1964, the American economist William Alonso introduced a deceptively simple formula in his doctoral thesis.10

R(d) = R₀ − t · d + ε

Rent at any point in a city, R, equals the rent at the central business district (CBD), R₀, minus commute cost t multiplied by the distance d from the CBD. Add a neighborhood premium ε — amenities, school zones, safety — and you have the final rent. Known as the Alonso-Muth-Mills bid-rent model, this formula has been the foundational framework for urban real estate analysis for six decades.

The implications for APAC Living today are sharp. In cities where commute cost t is high — cities where commuting is long and grueling — the premium for multifamily near the CBD structurally widens. Seoul ranks among the world's highest-commute-cost cities. The real commute-time gap between Gangnam and Sanggye-dong, and the rent gradient that gap produces, forms the foundation for studio and multifamily investment in Seoul.

But the Alonso model leaves one question unanswered: why do people flock to such expensive cities in the first place? That question was already answered in 1890 by the 19th-century economist Alfred Marshall.11

Marshall argued that when industries cluster in a specific region, productivity rises for three reasons. First, knowledge spillovers: when people doing similar work sit close together, learning spreads naturally. Second, labor pooling: the probability of talent and jobs matching up rises. Third, input sharing: specialized services and supply chains can be shared across many firms. Modern economists bundle these three effects under a single term: agglomeration economies.

Empirical studies estimate that a doubling of population agglomeration raises per-capita productivity by roughly 4–8%, though estimates vary widely across studies and city contexts.12 The numbers look small, but they compound. Seoul's economic density is several multiples that of Korea's second-tier cities, and the resulting productivity premium translates into wages, and wages into the purchasing power to absorb higher rents. What Seoul attracts isn't so much "people" as "high-wage jobs" — and the people whose wages can absorb the resulting rents.

This is where Korea's distinctiveness comes into focus. Among OECD nations, Korea exhibits one of the most extreme primate city structures. The Seoul Capital Area alone holds half the country's population and 52% of its GDP.7 The concentration is markedly sharper than Japan's (Greater Tokyo around one-third of national GDP) or Australia's (Sydney and Melbourne combined near 40%). The implication for Living sector investment is anything but minor: Living investment in Korean cities outside Seoul is, in practice, a different asset class altogether.

We covered the third theory — Glaeser's supply elasticity — in the previous chapter.13 The fourth is Charles Tiebout's 1956 model. Tiebout assumed that "people choose where to live by weighing the combination — the bundle — of taxes and public services on offer." He called this behavior "voting with their feet."14

Today's institutional Living operators — Greystar, Cortland — package what look like private-sector analogs of Tiebout's public goods: "bundles of private public goods." Concierge service, shared fitness, co-working space, 24-hour security, community programming — plus brand trust. The quality of this bundle determines the rental premium. Institutionally operated co-living buildings in Korea have been observed to command meaningful premiums to nearby private rentals — a vivid commercial demonstration of how Tiebout's model translates beyond the public sector.

Lay these four theories side by side, and almost every phenomenon unfolding across APAC Living today finds its explanation. Alonso tells us why the CBD premium widens. Marshall, why people pile into such expensive places. Glaeser, why supply fails to keep pace with demand. Tiebout, why institutional operators are reshaping the rental market.

Old theories explain the newest phenomena. That is the enduring virtue of good theory.

APAC market analysis has largely been conducted in the language of "maturity" — Mature, Institutionalizing, Developing. The taxonomy is useful, but it doesn't quite answer the question investors actually face: "In this market, whose hands move the money?" Who allocates the assets. What logic engineers the cash flow. And what character does the market take on as a result. The answers to these three questions are what truly separate these markets.

Viewed through this three-axis lens, each of the four cities reveals its distinct character. In Tokyo, real estate developers pool and deploy capital. In Seoul, the jeonse-based informal finance structure has long stitched together individual capital — and that framework is now shifting toward monthly-rent dominance. In Singapore, the public sector holds both supply and capital in a single grip. And Sydney is the arena where global institutional capital competes. Under the shared banner of "Living," these four markets are, in practice, four different asset classes.

These four portraits don't capture the entirety of APAC Living, but they show at a glance why each market has taken its current shape, and which kinds of capital can take which positions. Now let's examine each market in turn.

Within APAC Living, the full spectrum — Core to Opportunistic — sits open under a single theme. The character of capital determines which seat each investor takes.

Long-duration income-seeking capital — pension funds, insurers — targets Japanese and Singaporean urban multifamily through a Core strategy. Low leverage (LTV 40–50%), 10+ year holds, and target IRR of 5–7%. Effectively a bond substitute.

Asset managers' balanced play lands at Core+. Australian BTR platforms, Japanese Tier-2 city multifamily, and Australian PBSA are the main targets. LTV 50–60%, 7–10 year holds, target IRR 7–10%. Stable income layered with moderate growth.

Value-Add is the domain of capital with operational capability. Seoul in particular, where greenfield BTR has effectively halted under the triple pressure of land costs, construction costs, and regulation, makes Conversion — acquiring existing assets and transforming them into institutional-grade co-living, PBSA, and serviced apartments — the de facto primary strategy. In Australia, repositioning and brand upgrades drive NOI growth in parallel. Target IRR of 12–15% is the realistic expectation.

Finally, Opportunistic strategy targets the institutional gap in Korea and Hong Kong. In Seoul, Institutional Pre-emption — where global LPs stake early claims on core-location co-living and senior platforms in the vacuum left by domestic institutions — is central. Target IRR 17–22% with a short 3–5 year hold. This is terrain where execution capability determines outcomes, making partnerships with trustworthy local operators and developers the single most important factor.

None of these risks, on its own, overturns the sector's structural outlook. But each can seriously erode the returns of specific strategies. Korea's Value-Add and Conversion strategies are sensitive to regulation and tax; Core strategy is sensitive to rates; Opportunistic is vulnerable to execution risk. Each strategy carries a different risk tolerance — and this is the real reason portfolio diversification exists.